Exhibit 16 -Refer to Exhibit 16

question 19

Multiple Choice

Exhibit 16.1
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
A portfolio manager is trying to establish a strategic asset allocation for two different clients, Bob Bowman and Tom Luck. Bob Bowman has a risk tolerance factor of 22 and Tom Luck has a risk tolerance factor of 6. The characteristics of the three model portfolios under consideration are provided in the table below. $\begin{array}{ccccc}&\text { Asset Mix}&&\text { Expected}\\\text { Portfolio } & \text { Stock } & \text { Bond } & \text { Return } & \text { Variance } \\\hline \text { A } & 0.75 & 0.25 & 0.12 & 0.45 \\\text { B } & 0.4 & 0.6 & 0.08 & 0.16 \\\text { C } & 0.3 & 0.7 & 0.05 & 0.06\end{array}$
-Refer to Exhibit 16.1. The expected utilities of Portfolios A, B and C for Tom Luck are

• A)Portfolio A = 9.95, Portfolio B = 7.27, Portfolio C = 4.73
• B)Portfolio A = 4.5, Portfolio B = 5.33, Portfolio C = 4.0
• C)Portfolio A = 7.95, Portfolio B = 5.33, Portfolio C = 4.73
• D)Portfolio A = 3.5, Portfolio B = 7.27, Portfolio C = 4.73
• E)Portfolio A = 5.33, Portfolio B = 7.27, Portfolio C = 6.75

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